by Steve McDonald

America’s finest quality is that it has no memory!

Three months ago, the topic of the day was which window to jump from; today all I hear is how hot the market is. This morning’s conversation on “Squawk Box” was how the market has moved 24 percent and maybe there is too much exuberance.

Too much exuberance? Last October we were wondering if there would be a run on the banks. Now it’s too much activity.

This complete lack of an ability to remember any bad news has a backside, you knew that was coming. The backside is that we also are blinded by the short-lived bad news.

For four months, almost every editor at “The Daily Edge” described the market this fall as the best buying opportunity of our lifetime. Virtually no one paid any attention.

The only thing more deficient than our memory is our ability to buy when things are cheap, stocks and bonds. We love to pay way too much for our investments.

Take bonds. Despite the fact that bonds are virtually immune to the day-to-day swings of the stock market, no one took advantage of bank bonds that dropped 50 percent and more during the insanity of last October and November. AAA, AA and A rated bank bonds were being given away.

Bank bonds that were recommended by The Bond Trader have returned 25 to 50 per cent in about three months. This was while your stock portfolio was being flushed away.

It wasn’t just bank bonds either. Companies that had nothing to do with the banking or brokerage crisis dropped like rocks, too. AAA and AA bonds were there for the picking at prices we may never see again. No one jumped in.

Here are two examples of bonds The Bond Trader recommended that have made huge returns. You can check the prices at a website called, investinginbonds.com. Just enter the CUSIP and check the trades during the months of September through November.

National City Corp. This is a small operation, relatively speaking, that does not rely on retail or mortgages for their business. They announced before the bailout was even approved that they did not need it, they were fine. Still their bonds dropped like a rock. The Bond Trader recommended it at 90 and again at around 60. (That’s $900 and $600 for those unfamiliar with bonds) CUSIP 634902LM0.

Right now, you can sell the bond for about $960 to $980. That’s in about three months. That’s a 62% return on an investment grade bond in a couple months. Fewer than 30 people bought it when it was recommended.